ABN Amro sale of US arm may be challenged

Royal Bank of Scotland's (RBS) hopes of mounting a counter-bid for ABN Amro last night rested with its lawyers as a consortium led by the British banking group tried to work out if it could stop the Dutch lender selling its US subsidiary as part of its agreed £66 billion (€97.3 billion) takeover by Barclays.

ABN Amro yesterday confirmed it was selling LaSalle, its US banking operation, to Bank of America for $21 billion in cash.

The sale, which does not need to be approved by shareholders, potentially undermines the rationale for the proposed break-up of ABN Amro by RBS, Santander of Spain and Fortis, the Belgian-Dutch banking and insurance group.

The sale of LaSalle was widely seen as a coup for Barclays, which yesterday formally unveiled the terms of its all-share offer for ABN Amro. To justify the deal, the largest ever in the financial services industry, the two banks plan to cut 12,800 jobs from a combined workforce of 217,000 and shift 10,800 jobs to lower-cost offshore centres.

Barclays and ABN Amro yesterday presented the deal as a stark alternative to the proposed break-up bid, which would split the Dutch bank into three parts.

John Varley, chief executive, Barclays, said: "We are talking about building one of the best banks in the world. The other proposition is the deconstruction by a consortium. These are strongly contrasting and you can see where the momentum is."

Rijkman Groenink, ABN Amro's chief executive, said the bank had concluded that a break-up would not make sense and dismissed the consortium's proposal as "a vague letter".

However, ABN Amro's actions risk infuriating the consortium. Executives from the three banks including Sir Fred Goodwin, chief executive of RBS, yesterday flew to Amsterdam for a meeting with ABN Amro executives to explain the break-up bid.

But they abandoned their plans after learning of the details of the sale of LaSalle.

In a terse statement, the group said it had requested information from ABN Amro to "understand the circumstances under which" the sale of LaSalle could be terminated. An option thought to be under consideration is whether the group can legally challenge the sale of LaSalle because it could be seen as an attempt to frustrate a higher offer for ABN Amro.

VEB, the Dutch shareholder association, said it would legally challenge ABN Amro's decision not to put the $21 billion La Salle sale to a shareholder vote if it emerged that the divestment deterred rival bidders.

Peter Paul de Vries, VEB director, said: "It is against good corporate governance if you sell off such an important asset without consulting your shareholders."

ABN Amro shares fell 1.43 per cent to £35.77, suggesting that hopes of a rival bid emerging are receding.

- (Financial Times service)